TMI Blog1996 (2) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... the assumption that its income had escaped assessment on account of its non-filing of the returns within the time prescribed under section 139 of the Act. The assessee thereafter filed the returns on March 17, 1973, and the assessment for both the years was framed on March 30, 1973, under section 147 of the Act. The Income-tax Officer also levied interest of Rs. 5,325 and Rs. 5,556 for the two years, respectively, for late filing of the returns. The assessee then filed applications under section 154 of the Act with a request to delete the interest charged as according to it, the same was not chargeable. These applications were rejected and the Income-tax Officer held that the charging of interest was in order. Being aggrieved by the order of the Income-tax Officer dismissing the application for rectification under section 154 of the Act, the assessee filed two appeals before the Appellate Assistant Commissioner who upheld the order of the Income-tax Officer and observed that the returns filed by the assessee were not under section 139(1) of the Act as they had not been filed by June 30, 1968, and June 30, 1969. He further observed that the returns could not be deemed to have been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice issued under section 148 of the Act should be deemed to be a notice under section 139(2) and the returns filed in response thereto should also be deemed to have been filed under the latter provision. It is then urged that all the provisions of the Act will consequently apply to such returns and since these were not filed within the time allowed by the notice, the assessee became liable to pay interest in terms of the proviso, to sub-section (2) of section 139 of the Act as it then stood. The argument further is that the Income-tax Officer while assessing the escaped income under section 147 frames the assessment by resorting to section 143 of the Act and that he has no power to make an independent assessment under section 147. He referred to the Full Bench decision of the Kerala High Court in Lally Jacob v. ITO [1992] 197 ITR 439, and to a Division Bench judgment of the Calcutta High Court in Burdwan Wholesale Consumers' Co-operative Society Ltd. v. CIT [1991] 191 ITR 570, in support of his contention. Mr. B. S. Gupta, senior advocate, appearing for the assessee, on the other hand, contended that the legal fiction provided in section 148 was limited only for the purpose of tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Officer may, in his discretion, extend the date for furnishing the return-- (i) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired on or before the 31st day of December of the year immediately preceding the assessment year, and in the case of any person referred to in clause (b), up to a period not extending beyond the 30th day of September of the assessment year without charging any interest ; (ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest ; and (iii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at six per cent. per annum shall be payable from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return-- (a) in the case of a registered firm or an unregistered firm which has been assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any person under any provision of this section." " 148. Issue of notice where income has escaped assessment.--(1) Before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. (2) The Income-tax Officer shall, before issuing any notice under this section, record his reasons for doing so. " The returns as filed by the assessee on March 17, 1973, were obviously not filed within the time prescribed by sub-section (1) of section 139. These returns were also not filed under sub-section (4) of section 139 either because those could be filed only up to March 31, 1972, for both the years. What is contended on behalf of the Revenue is that the returns will be deemed to have been filed under sub-section (2) of section 139 because of the legal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision, the Income-tax Officer has to resort to the provisions of section 143 for the purpose of making an assessment cannot be accepted in view of a binding precedent of this court in CIT v. Usha Aggarwal [1989] 178 ITR 406. It has been held in this case that there is a clear distinction between an assessment under section 143 and under section 147 read with section 148 of the Act and that an assessment under section 147 does not depend upon the authority of section 143 for its completion. The learned judges have further held that section 147 itself authorises the Income-tax Officer to assess, reassess or recompute the escaped income and the power in section 147 to make an assessment is quite independent of the power to make the assessment under section 143. Thus, as held in this case, the assessment under section 147 is a species different from the assessment under section 143 and both have been treated differently under the Act : In Koppind's case [1994] 207 ITR 228 (Cal), the business loss computed on the basis of a return filed in response to a notice under section 148 of the Act was not allowed to be carried forward. Section 80 of the Act provides that the loss determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Satyendra Mohon Roy Chowdhury v. CIT, AIR 1930 Cal 627. In the ultimate analysis, the findings in Koppind's case [1994] 207 ITR 228 (Cal) were recorded in the following words (page 238) : " We follow the principle as laid down by this court in Satyendra Mohon Roy Chowdhury's case, AIR 1930 Cal 627 [FB], and, by applying the same, hold that by filing a loss return in pursuance of a notice under section 148 but beyond the time available for filing a voluntary return under section 139(4), the assessee cannot be entitled to determination of the loss for the purpose of carry forward and set-off, because section 80 has a clear mandate that it is only the loss determined in pursuance of a return filed under section 139 that is eligible for carry forward and set-off. " We are in respectful agreement with the view expressed by the learned judges in Koppind's case [1994] 207 ITR 228 (Cal). The same view was taken by another Division Bench of the Calcutta High Court in Banshidhar Jalan's case [1994] 207 ITR 488 (Cal). In Triple Crown Agencies' case [1993] 204 ITR 377 (Gauhati), the assessee did not file its return of income under any of the sub-sections of section 139 and it was only in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and a later Division Bench judgment of the Calcutta High Court in Koppind's case [1994] 207 ITR 228 also did not accept this view. Again, the Kerala High Court in Lally Jacob's case [1992] 197 ITR 439 [FB] held that an assessment for the first time made under section 147 is a regular assessment because-section 148 enjoins the Income-tax Officer to serve a notice containing all the requirements of section 139(2). The learned judges were of the view that a notice under section 148 has to be deemed to be a notice under section 139(2) and if the other provisions of the Act are applied, an assessment in pursuance to that can be made only under section 143 or section 144. According to the Kerala High Court, there is no separate provision in the Act under which escaped income can be brought to tax. They were, therefore, of the view that section 147 does not enable an Income-tax Officer to pass an effective order of assessment and when escaped income is brought to tax the assessment has to be made under section 143. We respectfully disagree with the view expressed by the learned judges in view of the binding precedent of our own court in Usha Aggarwal's case [1989] 178 ITR 406, where a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g which can only be established by a long drawn process of reasoning. An error which is far from self-evident is not an error apparent. On a point of law there may be two possible opinions and in that event the so called error may be there when the Income-tax Officer adopts a view which is not accepted by the jurisdictional High Court or by any appellate authority but such a mistake cannot be said to be one that is apparent from the record which could be rectified by resorting to the provisions of section 154 of the Act. The apex court in Balaram (T. S.), ITO v. Volkart Brothers [1971] 82 ITR 50 observed that (headnote) " a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions." In the case before us, the question as to whether interest was payable or not depended upon the interpretation of the provisions of section 148 read with section 139(2). There is divergence of opinion amongst some High Courts on the question whether a return filed in pursuance of a notice issued under section 148 is a return under section 139(2) or not. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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